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HomeMy WebLinkAbout15-023 - ADMIN Resolution - City Council - 2015/02/17RESOLUTION NO. 15-023 RESOLUTION APPROVING THE TRANSFER OF THE CABLE FRANCHISE AND CHANGE OF CONTROL OF THE GRANTEE WHEREAS, Comcast of Arkansas/Flonda/Louisiana/Mmnesota/Mississippi/Tennessee, Inc. ("Grantee"), currently holds a cable television franchise ("Franchise") granted by the City of St. Louis Park, Minnesota ("City"); and WHEREAS, Grantee owns, operates and maintains a cable television system in the City ("System") pursuant to the terms of the Franchise; and WHEREAS, on February 12, 2014, Comcast Corporation ("Comcast") and Time Warner Cable Inc. ("TWC") entered into an Agreement and Plan of Merger; and WHEREAS, on April 25, 2014, Comcast and Charter Communications, Inc. ("Charter") entered into the Comcast/Charter Transactions Agreement (the "Agreement"), pursuant to which the Grantee, through a restructuring under Comcast's ownership, will become Comcast of Minnesota, LLC ("New Grantee") and immediately thereafter will become a wholly-owned subsidiary of Midwest Cable, Inc ("Midwest Cable") (the "Transaction"), and WHEREAS, on or about June 17, 2014 the City received from Grantee, FCC Form 394 - Application for Franchise Authonty Consent to Assignment or Transfer of Control of Cable Television Franchise ("Application"); and WHEREAS, Federal law and the terms of the Franchise require that the City take action to consider the Application within one hundred twenty (120) days of the date of receipt, or on or before October 15, 2014; and WHEREAS, on or about August 22, 2014 Comcast and Midwest Cable agreed to extend the Application review period for sixty (60) days until December 15, 2014 to allow the City time to review the additional information concerning the qualifications of Midwest Cable provided to the City on September 30, 2014; and WHEREAS, on or about September 30, 2014 Comcast and Midwest Cable agreed to a further extension of the Application review penod for thirty (30) days until January 15, 2015 to allow the City to review certain service agreements related to the Transaction as well as certain SEC financial filings to be made available for review on October 31, 2014; and WHEREAS, on or about December 23, 2014 Comcast and Midwest Cable agreed to a further extension of the Application review period through and including February 13, 2015; and WHEREAS, on or about January 14, 2015 Comcast and Midwest Cable agreed to a further extension of the Application review period to accommodate continuing discussions and agenda deadlines through and including February 20, 2015; and WHEREAS, Section 28-1-7(2) of Ordinance No. 2309-06 requires the City's advance written consent prior to the Grantee's transfer of the Franchise; and WHEREAS, as a result of the proposed Transaction Grantee has requested consent from the City to the proposed transfer of the Franchise, and Resolution No. 15-023 -2- WHEREAS, the City has reviewed the proposed Transaction, and based on information provided by Grantee and Midwest Cable, the City has elected to approve the proposed Transaction subject to certain conditions as set forth herein; and WHEREAS, the City retained Front Range Consulting ("FRC") to conduct a review of the franchise fees and PEG fees paid by Grantee to the City for the penod beginning January 1, 2011 through December 31, 2013 ("Review" Period"); and WHEREAS, FRC submitted its findings and recommendations in its November 2014 Report ("Report") to the City and thereafter provided Grantee with a copy of the Report; and WHEREAS, as part of this proceeding the City and Grantee desire to conclude and settle all disputes arising out of or relating to Grantee's payment of franchise fees and PEG fees dunng the Review Period. NOW, THEREFORE, the City of St. Louis Park, Minnesota hereby resolves as follows. 1. All of the above recitals are hereby incorporated by reference as if fully set forth herein. 2. The Franchise is in full force and effect and Grantee is the lawful holder of the Franchise. 3. New Grantee will be the lawful holder of the Franchise after completion of the Transaction. 4. The City hereby consents and approves of the proposed Transaction subject to the below conditions. a. New Grantee agreeing to assume any and all liabilities, known and unknown, under the Franchise. b. Within twenty (20) days of the date of adoption of this Resolution, New Grantee shall execute and file with the City the Acceptance and Agreement attached hereto to venfy New Grantee's compliance with the terms and conditions of this Resolution; and c. Within thirty (30) days following close of the Transaction, Midwest Cable (also to be known as GreatLand Connections Inc.) shall execute and provide the City with the Corporate Parent Guaranty attached hereto as Exhibit A and incorporated by reference. d. Within thirty (30) days following close of the Transaction, Midwest Cable (also to be known as GreatLand Connections Inc.) shall execute and provide the City with a wntten guaranty in the form attached hereto as Exhibit B specifying that subscriber rates and charges in the City will not increase as a result of the costs of the proposed Transaction. e. New Grantee will participate in quarterly meetings with members of the City or the City's designees for the first two (2) years following the close of the Transaction to venfy that subscnber issues and concerns are being addressed by New Grantee or any other entity that may have interaction with subscnbers within the City. If issues are not being addressed, New Grantee agrees to meet with the City, as directed, to explain steps being undertaken to address subscriber concerns and New Grantee will provide regular and timely updates to the City to provide verification of corrective actions being undertaken to address unresolved issues. ii0 • • Resolution No. 15-023 -3- f. New Grantee will maintain an "escalated complaint program" to escalate unresolved cable television complaints from subscnbers. One or more specifically identified employee(s) of New Grantee shall be available to City via email for reporting issues. These specifically identified employee(s) of New Grantee will have the ability to escalate service issues to a senior officer of New Grantee or New Grantee's parent company when necessary. New Grantee will follow-up with City by email or by phone with a summary of the results of the complaint(s). g. New Grantee will commit to comply with Section 28-1-19 of the Franchise and submit quarterly reports to venfy compliance with applicable FCC customer service standards regarding answering calls, wait times, hold times and related call answenng statistics. h. No later than twelve (12) months from the date this Resolution is adopted and upon ninety (90) days' advance written notice from the City, New Grantee shall make available to the City one (1) high definition PEG channel ("HD PEG channel") on the cable system The City represents that it has or will have available by that date sufficient local, non -character generated programming in HD format so as to provide content of value to viewers and not have a blank channel. i. The content of the HD PEG channel is up to the City. The City may simulcast one (1) of the existing PEG channels in HD and SD formats, or it may choose to provide subscnbers an HD channel that is programmed differently than the existing SD PEG channels (for example, the City could create a "best of" HD PEG channel that carries a combination of HD PEG programming from the existing SD channels). ii. New Grantee shall deliver the HD signal to subscnbers so that it is viewable without degradation, provided that it is not required to deliver a PEG channel at a resolution higher than the highest resolution used in connection with the delivery of local broadcast signals to the public. New Grantee may implement HD carnage of the PEG channel in any manner (including selection of compression, utilization of IP, and other processing characteristics) that produces a signal as accessible, functional, useable and of a quality comparable (meaning indistinguishable to the viewer) to broadcast HD channels carred on the cable system. Ili. The HD PEG channel will be assigned a number near the other HD local broadcast stations if such channel positions are not already taken, or if that is not possible, near HD news/public affairs programming channels if such channel positions are not already taken, or if not possible, as reasonably close as available channel numbering will allow. iv. City acknowledges that HD programming may require the viewer to have special viewer equipment (such as an HDTV and an HD -capable digital device/receiver), but any subscnber who can view an HD signal delivered via the cable system at a receiver shall also be able to view the HD PEG channels at that receiver, without additional charges or equipment. By agreeing to make PEG available in HD format, New Grantee is not agreeing it may be required to provide free HD Resolution No. 15-023 -4- equipment to customers including complimentary municipal and educational accounts and universal service accounts, nor modify its equipment or pncing policies in any manner. City acknowledges that not every subscriber may be able to view HD PEG programming (for example, because they don't have an HDTV in their home or have chosen not to take an HD capable receiving device from New Grantee or other equipment provider) or on every TV in the home. v. No sooner than twelve (12) months from the activation of the first HD PEG channel, upon ninety (90) days' wntten notice from the City, New Grantee shall provide a second HD PEG channel to the City upon the City's simultaneous surrender of one SD PEG channel or, if the City elects, upon the City and New Grantee reaching agreement on other mutually -acceptable terms for the provision of a second HD PEG channel. i. In consideration for New Grantee providing the City with the first HD PEG channel as set forth in Section 4.h., the City agrees that Section 28-1-14, subsection (5) of the Franchise shall be amended to read: "Video on Demand The Company shall provide Video on Demand (VOD) for government and community programming The VOD service to be provided herein shall be limited to up to ten (10) SD hours per month, and in addition to Cityprovided content, may include ISD 283 programming The City will be solely responsible for determining programming priority and will be responsible for providing Company with good quality masters in a format determined through mutual agreement A presentation form (stating program information, the City's acceptance of responsibility for content, "kill" dates, if applicable, and other matters) and content delivery method will be determined through mutual agreement of the parties." j. New Grantee will make available to the City the ability to place PEG channel programming information on the interactive channel guide by putting the City in contact with the electronic programing guide vendor ("EPG provider") that provides the guide service. New Grantee will be responsible for providing the designations and instructions necessary to ensure the channels will appear on the programming guide throughout the junsdictions that are part of the City and the costs of any necessary headend equipment associated therewith. The City shall be responsible for providing programming information to the EPG provider and for any costs charged by the EPG provider, unless New Grantee is required to pay for PEG programming guide costs per applicable law or national commitments. k. Grantee shall, within thirty (30) days of the date of adoption of this Resolution, submit payment to the City in the amount of Eight Thousand and No/100 Dollars ($8,000.00) ("Payment"). The City and Grantee agree that the Payment represents full and complete settlement of all claims dunng the Review Period. It is further agreed that the Payment shall not constitute "gross revenue" in whole or in part as that term is defined in the Franchise. 1. New Grantee shall maintain and provide (as Grantee currently provides), free transport services in accordance with Section 28-1-15 of the Franchise. Resolution No. 15-023 -7- EXHIBIT A CORPORATE PARENT GUARANTY THIS AGREEMENT is made this day of (this "Agreement"), by and among GreatLand Connections Inc. Delaware corporation (the "Guarantor"), the City of St. Louis Authority"), and , a ("Company"). , 201_ (f/k/a Midwest Cable, Inc.), a Park, Minnesota ("Franchising WITNESSETH WHEREAS, on or about February 3, 2006 the Franchising Authonty adopted Ordinance No. 2309-06 granting a Cable Television Franchise which is now held by Comcast of Arkansas/Flonda/Louisiana/Minnesota/ Mississippi/ Tennessee, Inc. (the "Franchise"), pursuant to which the Franchising Authority has granted the nghts to own, operate, and maintain a cable television system ("System"); and WHEREAS, pursuant to the Comcast/Charter Transaction Agreement dated Apnl 25, 2014 by and between Charter Communication, Inc., a Delaware corporation, and Comcast Corporation, a Pennsylvania corporation, ("Agreement"), the Franchise will be transferred to the Company and the Guarantor will acquire control of the Company as an indirect subsidiary of Guarantor as a result of Comcast Corporation's contribution and spin off of certain cable television systems pursuant to the Agreement ("Change in Control"); and WHEREAS, Company and Comcast Corporation have requested the consent to the Change of Control in accordance with the requirements of Section 28-1-7(2) of Ordinance No. 2309-06; and WHEREAS, pursuant to Resolution No. 15-023, dated February 17, 2015, Franchising Authority conditioned its consent to the Change of Control on the issuance by Guarantor of a corporate parent guaranty guaranteeing certain obligations of Company under the Franchise. NOW, THEREFORE, in consideration of the foregoing promises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, in consideration of the approval of the Change of Control, Guarantor hereby unconditionally and irrevocably agrees to provide all the financial resources necessary for the observance, fulfillment and performance of the obligations of the Company under the Franchise and also to be legally liable for performance of said obligations in case of default by the Company. This Agreement, unless terminated, substituted, or canceled, as provided herein, shall remain in full force and effect for the duration of the term of the Franchise. • • Resolution No. 15-023 -5- m. New Grantee shall maintain and provide (as Grantee currently provides), the commitment of free cable TV service to schools and City buildings listed in Exhibit A of the Franchise as an expense for the New Grantee n. New Grantee's compliance with the requirements of paragraphs 4.a through 4.m of this Resolution shall be handled under the Franchise. New Grantee shall be subject to available enforcement procedures and remedies as if these obligations were set forth in the Franchise. o. Comcast shall, within twenty (20) days of the date of adoption of this Resolution, fully reimburse City for all of the City's reasonable costs and expenses in connection with the City's review of the proposed Transaction, including without limitation, all costs incurred by the City for experts and attorneys retained by the City to assist in the review as well as notice and publication costs ("Reimbursement"). i. The Reimbursement shall not be deemed to be "Franchise Fees" within the meaning of Section 622 of the Cable Act (47 U.S.C. §542), nor shall the Reimbursement be deemed to be (i) "payments in kind" or any involuntary payments chargeable against the Franchise Fees to be paid to the City by New Grantee pursuant to the Franchise. ii. The Reimbursement shall be considered a requirement or charge incidental to the awarding or enforcing of the Franchise M. It is understood that the language in this paragraph 4.o has been agreed to solely for the purpose of this Resolution and this Reimbursement, and does not prejudice any party from taking a different position regarding the Franchise Fee issues in the future. 5. In the event the proposed Transaction contemplated by the foregoing resolution is not completed, for any reason, the City's consent shall not be effective. If any of the conditions set forth herein are not met, the City's consent to the proposed Transaction ---shall be null and void and of no effect. Thi Resolution shall take effect and continue and remain in effect from and after the date of its passa.. , approval, and adoption. Administration: Adopted b • e City Council February 17, 2015 Cit Atte City Clerk Resolution No. 15-023 -8- Upon substitution of another Guarantor reasonably satisfactory to the Franchising Authority, this Agreement may be terminated, substituted, or canceled upon thirty (30) days pnor wntten notice from Guarantor to the Franchising Authonty and the Company. Such termination shall not affect liability incurred or accrued under this Agreement pnor to the effective date of such termination or cancellation. GREATLAND CONNECTIONS INC. (F/K/A MIDWEST CABLE, INC.) By: Its: SWORN TO BEFORE ME this day of , 2015. NOTARY PUBLIC • • • Resolution No. 15-023 -9- EXHIBIT B GUARANTY REGARDING RATES GreatLand Connections, Inc., upon closing of the proposed Transaction (as defined in the City of St. Louis Park, Minnesota Resolution No. 15-023), guarantees that rates and charges for cable service offered by , the Grantee in the City of St. Louis Park, Minnesota, will not increase as a result of the cost of the proposed transaction. GreatLand Connections, Inc. agrees that any failure to adhere to this guaranty shall be deemed a violation of the Franchise. EXECUTED as of GREATLAND CONNECTIONS, INC. By: Its: SWORN TO BEFORE ME this day of , 2015. NOTARY PUBLIC Resolution No. 15-023 -6- ACCEPTANCE AND AGREEMENT Comcast of Minnesota, LLC hereby accepts this Resolution No. 15-023 ("Resolution") and any attachments incorporated by reference in the Resolution and agrees to be bound by the terms and conditions of this Resolution and the terms and conditions of the Franchise referenced within the Resolution. Dated this day of , 2015. COMCAST OF MINNESOTA, LLC By: Its: SWORN TO BEFORE ME this day of , 2015. NOTARY PUBLIC